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The finite horizon, undiscounted, durable goods monopoly problem with finitely many consumers

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  • Berbeglia, Gerardo
  • Sloan, Peter
  • Vetta, Adrian

Abstract

We study the uncommitted durable goods monopoly problem when there are finitely many consumers, a finite horizon, and no discounting. In particular we characterize the set of strong-Markov subgame perfect equilibria that satisfy the skimming property. We show that in any such equilibrium the profits are not less than static monopoly profits; and at most the static monopoly profits plus the monopoly price. When each consumer is small relative to the market, profits are then approximately the same as those of a static monopolist which sets a single price. Finally, we extend the equilibrium characterization to games with an arbitrary discount factor.

Suggested Citation

  • Berbeglia, Gerardo & Sloan, Peter & Vetta, Adrian, 2019. "The finite horizon, undiscounted, durable goods monopoly problem with finitely many consumers," Journal of Mathematical Economics, Elsevier, vol. 82(C), pages 171-183.
    • Handle: RePEc:eee:mateco:v:82:y:2019:i:c:p:171-183
    DOI: 10.1016/j.jmateco.2018.11.002
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    Cited by:

    1. Heng Liu, 2020. "Deadlines in the market for lemons," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 305-323, October.

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